 When looking at the tax formula, we're focused now on the itemized deductions remembering that the first half of the income tax formula is in essence an income statement where we have income minus the equivalent of expenses, those being the deductions equals the equivalent of net income that being taxable income. Everything's flipped on its head for taxes. We want taxable income as low as possible, as opposed to normally when we want net income as high as possible. So that means that we would like to have income, but we would like it to be legally exempt if we could have that for the income line. And then on the deductions, as we're talking about here, the itemized deductions, we want them as high as possible. So we have this breakout from the above the line deductions, the adjustments to income we've talked about in a prior section, and the below the line deductions, which are the higher of the standard or itemized deductions. Whenever we think about the itemized deductions, we have to always consider what that standard deduction hurdle is because the itemized deductions will not help us unless we clear the standard deduction hurdle. The standard deduction hurdle will be dependent upon filing status. Now, if you look at the first page of the form 1040, we're down here on line number 12, which is the standard deduction or itemized deduction. And these are the numbers for the standard deductions on the left so you can get a feel for what they are for married and single. So you can get an idea as to whether it would be worthwhile to spend a lot of time picking up the information for the itemized deductions. So this is the Schedule A or a part of it, the top half of it. This being the itemized deductions, our focus, we're looking now at the medical and dental expenses. Now note that the medical and dental are usually not the one singular or main thing that pushes people over the threshold from standard deduction to itemized deduction. That thing usually being the purchase of a home because the home mortgage interest and the property taxes related to it are significant factors. So once you're itemizing, then it might be worthwhile to look into things like the medical expenses more closely because any deduction or any capacity to deduct medical expenses will now increase. Increase? Dead? Honey, it is. The itemized deductions, which have already the hurdle. That said, if there was a big catastrophe that happened, then the medical expenses in and of themselves might be really high for a particular year and could push people over the hurdle in and of themselves. Now one thing to just keep in mind with the medical and dental expenses is we have this component you can see here, which says 7.5% of line 11, which is basically your adjusted gross income. That's a hurdle that has to be cleared before you get any benefit from the medical expenses. So note most of the time when we talk about itemized deductions, the people taking them are more well off, more wealthy individuals are more likely to be itemizing. And then the medical expenses kind of works on the other side of things as well because the more well off someone is, the higher this hurdle will be. Because it's going to be, they have to clear 7.5% of their AGI. So more wealthy individuals are more likely to itemize, but they're also increasing the hurdle for the medical expenses to see if they would be able to deduct any of the medical expenses. All right, given that, these are the standard deductions and these are the things we want to keep in mind in order to determine if someone is going to be itemizing or not. So the medical and dental expenses, you can deduct only the part of your medical and dental expenses that exceed 7.5% of the amount of your adjusted gross income on form 1040 or 1040 SR line 11. So you have to clear that hurdle before they're even added to the total of the Schedule A, and then of course the total of the Schedule A has to clear the standard deduction before it would be beneficial to take the standard, the itemized deduction. So caution, if you receive a distribution from a health savings account or a medical savings account in 2022, see Publication 969 to figure your deduction. So notice there's other benefits for the health savings account, which could complicate the ability to take the deduction because you might have other benefits you get from that. And so if that complication is in place, you can get more detailed Publication 969, which is on the IRS website, irs.gov, deceased taxpayer. Certain medical expenses paid out of a deceased taxpayer's estate can be claimed on the deceased taxpayer's final return. So that would be somewhat of an unusual type of situation, but one that does come up, the medical deductions for the final return. So if that case comes up, you could see Publication 502 IRS website for more detail. More information, Publication 502 discusses the types of expenses you can and can't deduct. It also explains when you can deduct capital expenses and special care expenses for disabled persons. Note, when we get into this whole range of deducting medical expenses, it gets quite complex because now you have to define what kind of expenses count as medical expenses or not. And as you can imagine, people have basically come up with all kinds of things that you would say, well, that doesn't really make, I don't think you should get a deduct. Like they got a jacuzzi or something or like that. So my doctor said I need a medical whirlpool or something like that. You know, these kind of things can come up. My doctor said I needed a vacation to the Bahamas or something. So we have to be able to define, you know, these medical expenses and if they're not defined expressly in the code, then we might have to look at the regulations and so on and possibly even to like court cases and whatnot. But usually it's a fairly straightforward type of thing. It's been kind of worked out. But you can imagine that there could be a lot of gray areas. So examples of medical and dental payments you can include in calculating your total medical expenses. To the extent you weren't reimbursed in calculating your total medical expenses, you and can include what you paid for. Insurance premiums for medical and dental care, including premiums for qualified long term care, insurance contracts as defined in publication 502, but see limit on long term care premiums you can deduct later. So note that when we think of medical care, we kind of divide it out between long term care, which is care for someone, you know, you're paying for insurance in the event that you're no longer capable of taking care of yourselves, which is a very, you know, expensive type of things versus kind of normal medical insurance. And then reduce the insurance premiums by self-employed health insurance deductions you claim on schedule one line 17. So we talked about if you're self-employed, have a schedule C, you might be able to deduct insurance on schedule one. Now if you deduct it there, you can't also deduct it on the schedule A because that's what I would call double dipping, getting two deductions for the same payment. Now it would often be beneficial to be able to deduct it on the schedule C a lot of the times because then even if you're not itemizing, you would still get the deduction by being able to deduct it on schedule C. So you can't include insurance premiums paid by making a pre-tax reduction to your employee compensation because these amounts are already being excluded from your income by not being able to include in box one of your forms W2. So this gets a little bit messy because remember that most of the time, a lot of the times the medical expenses are paid by your employer. So when they're paid by the employer, then you would think that the whatever benefit that you're going to get, if you if you don't have to include those in income or you get a benefit from them, they might be it might be shown already by reducing box one of the W2 form and in that in that case, you've already kind of lowered your income if that was the case. So you can't lower the box one of the W2 form and take it take it again because once again, you would be like double dipping in that case. So if you are a retired public safety officer, you can't include any premiums you paid to the extent they were paid for with tax-free distributions from your retirement pan prescription medicines or insulin. So that's another item that could be included acupuncturists. So these are where we get into the more somewhat less orthodox kind of thing acupuncturists, chiropractors, dentists, eye doctors, medical doctors, occupational therapists, osteopathic doctors, osteopathic, physical therapists, podiatrists, psychiatrists, psychoanalysis, and psychologists. So we have a wide range and you can see throughout time as we've been thinking about these medical deductions that that the more recent ads or the things that could have been argued about more recently the acupuncturists and the chiropractors and then of course whether kind of mental things should be included as well. So you can those get into kind of messy territory sometimes when we're trying to determine whether or not something should be deductible or included as medical expenses.